Introduction to the course

Course Title B2B Marketing

Course faculty Dr. Jessy Nair
Batch to which the course is being offered 2023-25
Term in which the course is being offered 4
Type of the course Marketing Elective
Course Credit 3
No. of Sessions 20
Session Duration 90 min
Mail Id of the course faculty [email protected]

Course Outcome
CO1: To understand basic structure and characteristics of B2B Marketing and B2B
markets.
CO2: To provide a framework for understanding and analyzing
organizational buying behavior in sectors; commercial enterprises and
institutions of the business market.
CO3: To enhance the student’s ability in applying segmentation techniques in the
business market.
CO4: To enhance the student’s ability in applying marketing efforts (marketing mix
and relationship marketing) for the business market.
Course Outline

1. Introduction to B2B Marketing

2. Organizational Buying Behaviour

3. B2B Market Segmentation

4. Product and Brand Strategy

5. Formulating Channel Strategy

6. Pricing in B2B marketing

7. Managing marketing communications &

relationships for business market
No. Chapter Topics to be covered No. of
Sessions

3. B2B Market 1.Segmenting, Targeting and 2

Segmentation Positioning of Business Market,
Value based segmentation

2. Model for segmenting the

organizational Market.
Unit 3: B2B Market Segmentation

This unit

i. outlines the benefits of and the requirements for successful

market segmentation.

ii. explores and evaluates specific bases for segmenting the

business market.

iii. it provides a framework for evaluating and selecting

market segments.
B2B Market Segmentation: Introduction

High-Growth Companies Succeed by:

• Selecting well-defined groups of potentially

profitable customers

• Developing distinctive value propositions that

competitively meet customer needs

• Focusing marketing resources on acquiring,

developing, and retaining profitable customers
B2B Market Segmentation: Introduction

The business market consists of 3 broad sectors:

1. Commercial Enterprises
2. Institutions
3. Government

➢ Each sector has many segments (market segments)

➢ Each segment has a unique need and requires a unique
marketing strategy
The marketer who…
a. Recognizes various profitable segments
b. Develops competitive products or services
c. Develops a marketing program to take advantage of
opportunities B2B groups offer
…can be very successful!
B2B Market Segmentation: Introduction

What is a market?

A market is…

(1) People or organizations who

(2) need & want what we offer (all have the
same problem and need a similar solution)
(3) have the ability to purchase and
(4) the willingness to buy ASAP.

A group of people that lacks any one of these

characteristics is not a market.
B2B Market Segmentation: Why Business market segmentation?

i. It enables the marketer to understand the market better.

ii. Larger firms with adequate resources can develop separate marketing
strategies to meet the needs of different market segments.
iii. Smaller firms can also survive and succeed by focusing on niche market
segments.
iv. Effective allocation of resources to segments can be done.
v. It can establish how the company stands competitively with respect to
the market segments.
vi. Segmentation is not beneficial or practical for small market or for a few
customers.
vii. Difficulty in the segmenting process due to differences in buying
practices, requirements and characteristics of buying center members.
B2B Market Segmentation: Introduction
Market People or organizations with
needs or wants, the ability to purchase and the willingness to buy.
Market A group of present or potential customers with some common
Segment characteristics which we can explain (predict) their actions when
subjected to marketing stimuli.
Market The process of dividing a market into meaningful, relatively similar
Segmentation and identifiable segments or groups.
In B2B context market segmentation is classified:
i.Macro segmentation (characteristics of the buying orgn and buying
situation, Product/ service application, and thus divides the market by
such organizational characteristics: as size, geographic location, the North
American Industrial Classification System (NAICS) category, and
organizational structure.
Such characteristics are important because they often determine the buying
needs of the organization.
ii. Micro segmentation requires a higher degree of market knowledge,
focusing on the characteristics of decision-making units (buying center)
within each macrosegment— including buying decision criteria, perceived
importance of the purchase, and attitudes
toward vendors.
B2B Market Segmentation: Decisions

Market segment is a group of present or potential

customers with some common characteristic which is
relevant in explaining (predicting) their response to a
supplier’s marketing stimuli.

➢ Effective segmentation is the first step in designing /

planning a marketing strategy, in this context a B2B
one.

➢ The characteristics and need for each segment

enables the marketer to plan the approaches.

➢ The ultimate goal is to have the greatest amount of

difference between groups (segments) and high
similarities within them.
B2B Market Segmentation: Introduction

Segmentation involves identifying groups of

customers or business groups that are…

1. Large enough
2. Unique enough
3. Financially independent enough
4. Reachable enough

…to justify a separate marketing strategy.

 A Framework for Business Marketing Management
Business
marketing
strategy is
formulated
within the
boundaries
established
by the
corporate
mission and
objectives.

© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S.
Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
Unit 3: B2B Market Segmentation: Decisions
1. Segmenting and Targeting decisions
The starting point is two-stage marketing research design:
Stage 1 is ‘exploratory research’ to gain insight into possible market segments
for a new product.
Stage 2 is ‘conclusive or causal research’ to get a detailed information for
deciding which market segments to target.
2. Managing business Customer related decisions
Information from marketing research is needed to make many customer
related decisions, such as positioning, pricing, product, and promotion
strategies.
Farm Electronics (FE)
➢ Growth or opportunity matrix for FE
➢ Dinesh (Sole proprietor) and Anuj (General Manager) -
Family business
➢ 42 years of operations – Electrical and Electronic
Industrial Equipment Manufacturer
➢ Dilemma ?
➢ Should FE expand the scope of current market with
current products? Capable of customizing products for
current industrial market.
➢ Should FE look for new markets?
Unit 3: B2B Market Segmentation: Decisions

3. New Product/Market Decisions FE:

FE proprietors’ previous experience in
Stage 1: information through Electronics sector in various senior
marketing research is required to positions and well established
decide if the new product or organizations.
Son with qualification in Microelectronics
market idea is worth considering. and experience in security systems.

Stage 2: marketing research is Macro environment analysis:

Products
needed to find which one out of Band response tester (BRT)
different alternative new product Transformers and power supplies ~
concepts has the strongest appeal Electrical and electronics equipment’s
from potential customers.
Expansion from 1984 to 1992
Invested in equipment's and machines
Stage 3: decision on launching the In-house design and quality departments
new product is taken based on established to enhance quality.
results of marketing research on Sub-vendor for railways projects
market testing. worldwide.
B2B Market Segmentation: Decisions

3.1 B2B Market research

Another fundamental aspect is to know how to conduct a marketing research project.

• This question is answered by undertaking the following steps:

Step 1: Identify the problem/opportunity and
define the research objectives.
Step 2: Develop the research design or plan.
Step 3: Collect the data or information(secondary versus
primary data).
Step 4: Process and analyze the data.
Step 5: Present or report the research findings.

• For step 1, prepare a written statement stating the problem, background

information, and research objectives
(our key interest for discussion here / Case study FE / the product you handle)

• Page 5 paragraph 3, case study - FE

B2B Market Segmentation: Decisions

Case: FE Product portfolio

➢ has evolved over a period

➢ Transformer market (small and big products)

➢ Avoided competing with large players

➢ Positioned as a sub-vendor – identify firms that required

electrical components for their manufacturing processes
or building blocks for larger equipment’s--- Railways
market

➢ This may lead to repeat purchases.

B2B Market Segmentation: Decisions

Case: FE Product portfolio

B2B Market Segmentation: Decisions

Case: FE Product portfolio

➢ Provides robust after-sales support and flexible payment terms

➢ Offerings were superior to competition

➢ Proposition - Quality, timely delivery, after-sales service
➢ 100% replacement of products even after 90 days of delivery of
the product
➢ Lenient credit policy to its customers and additional service of
testing and manufacturing facilities customized to their needs.
➢ Quality: FE’s customers performed annual Six Sigma quality
audit and the vendor had to earn at least a three-star rating to
be retain the contract. The requirements in this case included
maintain standard norms for testing, International Organization
for Standardization and housekeeping.
➢ Followed stringent industry quality standards (see pp.3, para
last)
 B2B Market Segmentation: Decisions
3.3 Sources of data for Business market research
Two major sources of secondary data : internal and external.
Internal sources of secondary Data: Sales and cost information, accounts
receivable reports, quarterly sales reports and sales activity reports.
External sources of Secondary Data:
i) Government publications.
ii) Non-government publications.
iii) The Internet-based information sources.
iv) Syndicated or commercial sources.
v) Standard Industrial Classification (SIC) or National Industrial
Classification (NIC) system.
Business-to-Business
Marketing
Marketing Intelligence research
System studies

Business Decision
Secondary marketing Marketing strategy Market
support
data sources intelligence development response
system
system

Internal
information
system
B2B Market Segmentation: Decisions - SIC and NIC
3.3 Applying Standard Industrial Classification (SIC) or National Industrial
Classification (NIC) system as a source of data for Business market
segmentation
➢ It is a systematic way of classifying economic activities. Establishments using
similar raw material inputs, similar capital equipment, and similar labor are
classified in the same industry.
➢ In other words, establishments that do similar things in similar ways are
classified together
➢ SIC / NIC system is useful for governments and industries.

➢ This system is derived from the ‘International Standard Industrial

Classification’ (ISIC), which is approved by United Nations.

➢ India, like majority of countries, developed a revised version, based on ISIC :

Revision-4 (2008), and named it ‘National Industrial Classification-2008’ (NIC-
2008), for all economic activities in India.

➢ An initial step in any secondary data search is to use the numerical listing of
NIC Codes. NIC codes are used by business firms to identify potential
customers and suppliers.
B2B Market Segmentation: Decisions

4. Estimating Company’s Current and Future Demand

Estimating Company’s Current Demand

Estimated total market potential = estimated potential number
of buyers x average purchase quantity of each buyer x average
price, ( by carrying out buyers’ survey).
Company’s current demand = estimated total market potential
x company’s estimated market share.

Estimating Company’s Future Demand

Forecast macroeconomic and gross domestic product (GDP).
Estimate or forecast the industry sales, by carrying out survey
of buyers’ intentions.
Company’s sales forecast (or future demand) = Estimated
industry sales x company’s estimated market share.
B2B Market Segmentation: Decisions

4. Forecasting Approaches and Sales Forecasting

Methods
Forecasting Approaches: (Multiple forecasting
techniques)

Ex: Sales or Demand Forecasting Methods:

Qualitative Methods: i. executive opinion method, ii.
Delphi method, iii. sales force composite method, iv.
survey of buyers’ intentions method, v. test marketing
method.

Quantitative Methods: i. moving average method, ii.

exponential smoothing method, iii. decomposition
method iv. ratio method, v. regression analysis
vi. econometric analysis.
B2B Market Segmentation: Decisions
5. Steps in BM Profiling
Business marketers profile:
 Organization size
 Organizational buyer’s decision
styles & buying criteria
The process includes a two-staged
hierarchical approach, with the
following four steps.
• Conduct marketing research.
• Identify and select macro-
segments.
• Go for micro-segmentation (if
selected macro-segments do not
explain difference in buying
behavior of buying firms).
• Profile selected target segments.
B2B Market Segmentation: Decisions

5.Steps in BM Profiling
5.1 Major Macro-variables
- Type of Industry /
- Type of customer
- Size or usage rate of customer companies
- Customer’s geographical location
- Application or end-use of the product

5.2 Major Micro-variables

- Buying situations
- Customer firms’ capabilities
- Purchasing criteria/ Purchasing policies
- Personal characteristics of buying-center members
B2B Market Segmentation: Case

Major Macro-variables Case study: Farm Electronics

Type of Industry

Type of customer(s) Type A, B, C, D and PSUs

Size or usage rate of customer Type A customer-

companies
Customer’s geographical location India, potential market – countries in
Africa
Application or end-use of the SIC / NIC category ??
product
B2B Market Segmentation: Case

Micro-variables Case study: Farm Electronics

Buying situations New task ??? – New cust

Straight rebuy – Existing Cust
Modified rebuy – Existing Cust
Customer firms’ capabilities In-house R&D, Innovation,
Positioning on quality

Purchasing criteria Samples were to be produced,

protype tested

Personal characteristics of buying- Stringent quality checks by clients,

center members need to follow quality systems and
standards

Purchasing policies Finance department expects a

detailed price quotes – 15 days
RFP
Vendor form
B2B Market Segmentation: Case
B2B Market Segmentation: Case

Customer type Future plans Investment Challenge

Type A

Type B

Type C

Type D

PSU Railways-Become a direct Manufacturing Tedious tendering

a supplier equipment's, process-returns and
application fee for competition ( size of
several quality business)
certifications and Govt e-marketplace
workforce portal enhanced
recruitment transparency
B2B Market Segmentation: Case

1. Help Anuj finalise his business plan that would be presented

to his father?

2. Should the company maintain a status quo or diversify the

customer base?

3. In continuation with Q 2, FE should focus its efforts on

product development,
capacity enhancement, and
prospecting.
B2B Market Segmentation: - Macro segmentation
B2B Market Segmentation: Micro segmentation
B2B Market Segmentation: Targeting BM

Selecting the target segments:

Most attractive segments that are compatible with the
company’s objectives and resources are selected.

After selecting target segments, firms adopt one of the

following strategies:
i. Concentrated marketing
ii. Differentiated marketing
iii. Undifferentiated marketing
iv. Niche marketing
B2B Market Segmentation: Targeting BM

1. Concentrated marketing

It means focusing all the marketing efforts on a single

or relatively few, carefully defined segment(s).

It may be done by a company whose resources are

limited.

As the company increases its knowledge and tailors its

strategy to serve a particular segment far better than
its competitors, its reputation and share of business
increases in the segment. Ex: Farm Electronics
B2B Market Segmentation: Targeting BM

2. Differentiated Marketing

In this strategy, a large firm decides to target several market

segments whose needs, product usages, or market responses are
appreciably different.

Here a business organization decides to serve some segments and

avoid other segments within a market.

It develops a separate marketing strategy/plan for each of its

chosen segments.

Although this increases overall costs in such areas as product

development/modifications, promotion, production and sales
administration, its objectives of higher sales volume and a stronger
position in the chosen market segments are achieved.

Thus, differentiated strategy leads to higher sales and higher costs.

B2B Market Segmentation: Targeting BM
3. UnDifferentiated Marketing
➢ It refers to a situation when a business firm ignores segment differences
and develops a single marketing strategy that will be common to all
segments or the whole market.
➢ This strategy is used either because of lack of management analysis and
planning or it may be a conscious strategic decision due to standardized
products or services sold to a market where there is a lack of meaningful
differentiation among customers.
Ex: Wipro target all segments for the PC (Personal Computer) business (which
included laptops, desktops, and servers), with the highest level of quality and
service that would make the difference at the marketplace.
The Indian personal computer (PC) market, inclusive of desktops, notebooks, and
workstations, shipped 3.39 million units in the second quarter (Q2) of calendar
year 2024, up 7.1 per cent year-over-year (Y-o-Y). Source: Business Standard
India PC Market - Top 5 Companies Market Share - Q2 CY 2024
Company Q2 2024 Q2 2023
HP 31.70% 31.10%
Lenovo 17.50% 16.20%
Dell 14.80% 15.30%
Acer Group 14.70% 11.40%
Asus 7.10% 7.20%
Others 14.20% 18.80%
B2B Market Segmentation: Targeting BM

4. Niche Marketing
A niche is a more narrowly defined customer group
that seeks different mix of benefits.

Business marketers usually identify niches by dividing

a segment into subsegments.

The objective of niche marketing is to reach

potentially unsatisfied markets more effectively and
profitably than competitors.

The result is a selective approach to the market, and

finding a market niche where company’s capabilities
or strengths are best matched with customers’
needs.
B2B Market Segmentation: Positioning BM

What is Positioning ?
It is a distinct (or unique) place a product (or service) of a
selling firm occupies in the minds of target customers in
relation to competition.

In B2B marketing, it is the value proposition of the

market offering of a selling firm to target customers that
should answer the question:

“Why should the target customer buy the selling

company’s product/service instead of from the
competitor ?”

Is QSP triad the solution?

B2B Market Segmentation: Case

➢ Expansion options – overseas market – African

countries

➢ Chinese competition in these markets

➢ Competitive pricing and quality can be positioning

strategies
 Q&A

Thankyou!